Innovation and Global Issues with Multidisciplinary Perspectives

List of Contributors

Abdullah Elmas

Lec., Siirt University, Vocational School of Social Sciences, abdullahelmas@siirt.edu.tr

Bilge Nur Öztürk

Asst. Prof., Alanya Alaaddin Keykubat University, Faculty of Management, bilge.ozturk@alanya@edu.tr

Bilge Ünal

Lecturer, Bilecik Seyh Edebali University Rectorate, bilge.unal@bilecik.edu.tr

Doğukan Salih Kutlutürk

Doctoral Student, Kocaeli University, Institute of Social Sciences, dogukan_k@hotmail.com

Fatih Çağatay Cengiz

PhD, Res. Asst., Ondokuz Mayis University, Faculty of Economics and Administrative Sciences, cagatay.cengiz@omu.edu.tr

Ferihan Polat

Assoc. Prof. Dr., Pamukkale University, Faculty of Economics and Administrative Sciences, fyildirim@pau.edu.tr.

Hande Ünsal

PhD in Law, Asst. Prof., Ondokuz Mayıs University, Faculty of Economics and Administrative Sciences, hande.unsal@omu.edu.tr, handeunsal@gmail.com

Hasan Bülent Kantarcı

Assoc. Prof. Dr., Kocaeli University, Faculty of Economics and Administrative Sciences, hbkantar@kocaeli.edu.tr

Hüseyin Yılmaz

Doctoral Student, Gaziantep University, Institute of Social Sciences, huseyinyilmaz@siirt.edu.tr

Işıl Alkan

Asst. Prof., Ondokuz Mayıs University, Faculty of Economics and Administrative Sciences, isilalkan@omu.edu.tr

Muhammet Yunus Şişman

PhD, Dumlupinar University, Faculty of Economics and Administrative Sciences, myunus.sisman@dpu.edu.tr

Osman Erdal Şahin

Res. Assist., Uludağ University, Faculty of Economics and Administrative Sciences, osmanerdalsahin@gmail.com

Özcan Öztürk

Asst. Prof., Ataturk University, Faculty of Economics and Administrative Sciences, ozcan.ozturk@atauni.edu.tr

Graduate Student, Pamukkale University, Institute of Social Sciences, Department of Political Science and Public Administration, omerayna29@gmail.com.

A. Öznur Ümit

Assoc. Prof. Dr., Ondokuz Mayıs University, Faculty of Economics and Administrative Sciences, oumit@omu.edu.tr

Serap Pelin Türkoğlu

Res. Asst. Dr., Giresun University, Faculty of Economics and Administrative Sciences, serappelinozturk@hotmail.com

Tolga Öztürk

Asst. Prof., Alanya Alaaddin Keykubat University, Faculty of Management, tolga.ozturk@alanya@edu.tr

Yasemin Hancıoğlu

Asst. Prof., Ordu University, Ünye Faculty of Economics and Administrative Sciences, yaseminhancioglu@gmail.com

Hasan Bülent Kantarcı and Doğukan Salih Kutlutürk

Reflections of Externalities in the Public Economy

1 Introduction

It is possible to talk about the externality in the case that the actors in the economy or the companies have an indirect effect on the other individuals or firms and the actors who are under the influence do not bear the effect. If the actions and activities of the actors are indirectly beneficial to other actors, the validity of positive externality is mentioned here. For example, in the case of the establishment of a factory, the factory provides positive externality to the factory environment, such as the business opportunities provided by the factory, taxes paid to the state. However, if this indirect effect is harmful to the benefit rather than benefiting it, that is, if it is costing, there is the existence of negative externality. The most well-known example of negative externality is environmental pollution caused by producers in the production process (Stiglitz, 1994, p. 262).

Depending on the growth of the economies, the externalities reaching large dimensions have revealed the complexity of foreignness which is considered as a simple concept. Thus, there are many different separations in externalities. At first, it is only possible to talk about the externalities of the network, externalities in the education and health sector, and even environmental externalities, while talking about the existence of externalities in the production and distribution of public goods (Çetin, 2005; s. 144).

In the work of Adam Smith published in “The Rich of Nations”, there are talks about social activities. Therefore, it is claimed that the concept of externality is the first time to reveal the author. Marshall then used these factories to explain the incremental turnover of firms, while exploring the costs they incur in the production of these factories, apart from the internal economies, in order to explain the economic growth performances and the productivity of the developed countries, especially in the UK.

1.1 Concept and Scope of Externality

The first theoretical origins of the concept of externalities were created by Marshall. (Yüksel & Kargı, 2010, p. 184). It was later tried to be mathematically expressed by Pigou and neo-classical economists. In this context,

In such a case, there is talk of externality. In other words, it affects prosperity of product A consumed by consumer B (Önder, 2012, pp. 7–8).

The same situations can occur among producers. Externalities can then emerge in different forms. These producers are producers, producers are consumers, consumers are producers, and consumers are consumer goods (Giray, 2012, p. 13). In the externality of the producers, the production activities of a firm affect the production possibilities of another producer positively or negatively. For example, a decrease in the productivity of products produced by a manufacturer operating in the seafood sector resulting from the dropping of a company’s wastes into the sea or to the sea.

When the benefits provided by the producers to the consumers are examined, technology confronts. Technologic products such as televisions, computers, and mobile phones have been made available to consumers and, over time, the cost of access to these inventions has been made easier by the manufacturers’ technology development and use It is possible to realize the externality towards the producers from the consumers. For example, it is the benefit of the people who produce honey from the flowers that the people grow in their own gardens. A consumer’s benefit to other consumers, for example, is to pollute the environment and create garbage. It is then possible to see the reflection path from one section to another of the types of externalities in the table below (Pehlivan, 2008, pp. 45–46). In the case of negative externalities, the output will be lower than the effective level if positive externality occurs, while the marginal social cost of the output is higher than the marginal specific cost (Bakırtaş, 2015, pp. 63–65).

Tab. 1: Types of Externality and Related Examples. Source: Made by Authors.

Another distinction between externalities is the distinction between marginal and inframarginal externalities. According to this, there is a marginal externality if there is a positive or negative additional change in the welfare level of the other producer or consumer as a result of production or consumption activity. If the affected producer or consumer is not affected by the marginal changes in the activity that creates externalities, that is, if the marginal utility of the activity ←10 | 11→that caused the externalization is zero, then it would be possible to talk about the inframarginal externality (Yüksel & Kargı, 2010; s. 188).

A final distinction is the distinction between monetary and information externality. Monetary externality is the effect of a production or consumption activity through market-price transfer, through changes in prices. Technological externality is called information externalities, in which information generated by technological activities in which the firm or industry develops is of economic benefit to other firms or industries that are not common to the costs incurred when such activities are carried out (Türkcan & Kumral, 2013, p. 2) (Yüksel & Kargı, 2010, p. 189).

2 External Economies